In another article, I showed that for much of the population in the US, it’s basically impossible to afford an EV, or any car for that matter. At the same time, cars are an essential part of being able to keep a job and do anything at all in most of the country. You also can’t get solar on your roof or afford any other kind of clean technology if you don’t own a home.
When solar and EV companies run out of non-poor people to sell to, this problem is going to seriously hamper the growth of clean technologies, and we can’t rely on government to fix this. The industry is going to have to solve this problem by itself. The good news? There’s money to be made doing this.
Structural Problems Keeping People Poor, Unstable, & Unbanked
In a recent financial call, Elon Musk said that there’s too much brainpower and talent allocated to careers like law and finance in the United States. The truth is that he’s right about that, but that’s just the tip of the iceberg.
The big bureaucratic corporations have a lot of “bullshit jobs,” and this wasn’t an accident in many cases. In theory, the big companies would love to not have armies of lawyers and accountants, but in reality, it keeps small competitors from emerging. Should a small competitor emerge, it might prove to be more agile than the big companies and destroy them. To make this happen, they lobby government to create needless and complicated regulations, and make necessary regulations extra complicated and impossible to follow without a big team.
For example, look at the wife in the story from my previous article. To come up with extra money for car repairs, she started selling burritos in her part of town. Because she wasn’t licensed to handle food, she had to walk from place to place while not making it obvious she was selling food so the cops wouldn’t notice. This limits how much business she can do, and she couldn’t afford to get licensed by the city. Meanwhile, when a big fast food chain that would have paid her less than half what she was making selling burritos alone comes into town, that company has plenty of money and an army of compliance workers to make sure they can operate openly and maximize profits.
Is food safety important? Absolutely, but that could be accomplished without keeping the poor from entering an industry and improving their situation. When there’s a hard-working person willing to work, we should be very careful to get in their way as little as possible so they can provide for their families.
In many cases, the poor simply do their best to operate under the radar to get ahead in life, like the lady in our example above. People call this the “informal economy,” or sometimes System D. When someone can’t work because of government barriers to market entry, such as a lack of citizenship/documentation, licensing, or because the trade they work in is entirely illegal, many choose to enter the “underground economy” to stay afloat or to get ahead.
The downside is that none of this income can be documented or proved, and this denies the aspiring underground poor entrepreneur the ability to obtain banking services, loans, government assistance, and many other benefits of being part of the formal economy. An underground entrepreneur may sell enough burritos to rival the income of a middle class person, but won’t be able to prove that income to obtain a mortgage, an auto loan, or financing for solar panels and Powerwalls.
Thus, their access to expensive clean technologies is very limited unless they’re making enough money in something like the drug trade to afford to purchase these things outright.
Finally, there are many people who actually make decent income, but can’t get access to financing because they’ve managed their income poorly and have bad credit. Much of this comes from a lack of financial literacy because it simply isn’t taught in schools, while subjects many people will never use in their careers or lives are taking up time.
Understanding The Problem Further
The chances of getting government to stop oppressing the poor to protect entrenched business interests is very low in the United States and many other developed countries. Thus, we will need to find alternatives to get EVs, micromobility, and solar into the hands of the poor and informal workers.
First, we need to identify some things we can’t count on to fix this (as described above):
- Transit funding in most parts of the US
- Better infrastructure for micromobility (protected bike routes, etc.)
We also need to make sure we don’t treat everyone who can’t afford clean technologies as one group of people, when in fact there are:
- Truly poor people who stay in the formal economy and financially starve
- People who have good income in the informal economy, but with no access to financing
- People with good income in the formal economy, but poor financial management skills
We then need to not treat any of these things as unsolvable problems. Instead, we need to find ways to disrupt the status quo, and maybe even make good money solving these problems.
I’m not going to pretend to have all of the answers to this set of problems, but I have some ideas.
First off, getting clean technology into the hands of the truly poor is going to require that money be spent with no expectation of traditional returns or financing. The poor are already paying electric bills, and are paying something to get around, though. For electricity, access to renewables is largely going to naturally come from power grids as the prices of renewables drop, but the companies that are smart and find ways to rent poor people solar panels are going to make some big bucks in the next few years.
Blockchain technology is a possible solution to the issue of inaccessible financing in the informal economy. Want to make some money? Use blockchains to verify the income of a person working in the informal economy, and then use the proof of income to lend them some cryptocurrency with automated payments that come out of their crypto income. Sure, you’ll do business with some drug dealers and other criminals, but they’re not going to use solar panels or an EV to hurt people. Plus, you’ll be able to help the burrito ladies and cash-only handymen, too.
Finally, there are a lot of people who simply don’t keep a household budget, and that kills their ability to do business. I used to be one of them. My credit sucked big time and didn’t improve until I put some spreadsheets together to do some basic financial planning to get out of the rut.
If I owned a car or solar company, I’d be out there looking for all of the people on Twitter who complain about not being able to afford a Tesla or solar. There are many of them. Will they be your customer this year? Definitely not, unless you’re going to owner finance them, but that’s risky. Instead, why not reach out to them and help them come up with a plan to fix up their household finances? Giving them the instruction on that they should have got in high school, and then following up with them every few weeks to keep them motivated and working toward the goal of buying your product can pay off big in 12-24 months when the bunch of them start buying.
If nothing else, Tesla should be following up with people whose credit applications get denied and start working with them until they can get financed.
Do you have more ideas on how clean technology companies can help the poor and unbanked get access to these technologies? Please, share them in the comments so we can all learn from them.
Featured image provided by Tesla.